Here is our brief weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.
On 11 September 2020, the DWP issued the response to its February 2019 consultation Investment Innovation and Future Consolidation. The response includes consultation on further measures to improve outcomes for members with defined contribution (DC) pension benefits. Guy Opperman, Minister for Pensions and Financial Inclusion, said, “I am bringing forward measures that will ensure that we tackle persistent underperformance and poor governance by accelerating the pace with which the market is consolidating. This will bring the benefits of scale to all scheme members, including a greater capacity to take advantage of illiquid and other alternative investment classes.” The proposals include a new value for money assessment for schemes with DC assets of less than £100 million. The more “holistic” assessment involves trustees comparing costs, charges and net returns against three large DC schemes, as well as considering the effectiveness of the scheme’s administration and governance processes. If the trustees consider that the scheme is not delivering good overall value, the government expects the scheme to consolidate into a larger scheme unless (exceptionally) rapid improvements can be made (this will be monitored by The Pensions Regulator, who can order a scheme to wind up if it would be necessary to protect the interests of the members). It is also proposed that both small and large schemes with DC benefits will be required to state net investment returns for the default fund and self-selected funds in their annual chair’s statement. The consultation covers a broad spectrum of DC governance and investment issues, including barriers to investing in illiquid assets. The consultation closes on 30 October 2020.
The Pension Protection Fund (PPF) has confirmed that electronic invoices for the PPF levy will be issued this year. If you have received an email from “PPF postmaster”, the PPF says that this is a genuine email, which includes a link to a secure site. The statement advises that paper versions of the levy invoice will also be sent out. Note that these would normally be sent to the person named as the PPF levy contact on the pension scheme return.
From 1 October 2020, trustees of occupational pension schemes will be required to produce an implementation statement setting out (amongst other things) how they have implemented the policies in their statement of investment principles. The exact requirements will vary depending upon whether the scheme provides DC benefits or defined benefits only. For those schemes providing DC benefits (save where these are additional voluntary contributions only), the implementation statement must be published online in a freely available format from 1 October 2020. The legislation setting out the precise timings for the production and publication of the statement is complex, so if you have any questions about this please take legal advice.